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Exclusive: Paycom lawsuit proceedings continue

Patrick B. McGuigan
Editorial Director

An Oklahoma County court ruled August 4 that there is no reason to stall the proceedings of the district court while Paycom awaits the decision of the Oklahoma Supreme Court on a writ filed by the tech company months after it filed its original appeal.

OCPA (Oklahoma Council of Public Affairs), which already won its case on a motion to dismiss late last year, is able to proceed with its right to attorneys’ fees and sanctions, but got mixed results as to how it may proceed with legal discovery against Paycom.

During the recent hearing, Paycom persuaded the judge to limit efforts of OCPA to depose the man OCPA claims is behind Paycom’s attacks on the organization’s free-speech rights, Paycom CEO Chad Richison.

Attorneys for OCPA argued that though Paycom often brings lawsuits on behalf of a limited liability company, Paycom Payroll, LLC, it has referred to the limited liability company as a “publicly traded company” — a designation reserved for the parent company, Paycom Software, Inc. Though Paycom could still face millions of dollars in sanctions for its meritless lawsuit against OCPA, Paycom achieved a small victory in keeping its parent company and CEO from having to comply with much of OCPA’s discovery.

Paycom’s strategy, which played out in the hearing, has been to keep the case from reaching Richison or the parent company by emphasizing the distinction between Paycom Payroll, LLC, where Richison is CEO, and its parent company, Paycom Software, Inc., where he is also CEO. This is not totally without merit, as Oklahoma law typically distinguishes between distinct legal entities and their shareholders or members. That can, at times, break down when one entity is essentially the alter ego of another entity or person, which appears to be the case here.

Richison sued OCPA after a March 2020 news article included criticisms of his advocacy for draconian measures to force business closures or restrictions as the COVID-19 virus reached Oklahoma.

His contentions were rejected when the court found Paycom’s “claims against OCPA relate[d] to or [were] in response to the OCPA’s exercise of the right to free speech.” The judicial ruling found the Paycom lawsuit meritless and that there was “absence of any evidence of actual malice by OCPA.”

This lawsuit was not the first time Paycom has used its considerable resources to try to influence various entities — some much larger than OCPA. In 2020, Richison criticized past efforts at diversity and inclusion at the University of Oklahoma, saying “previous diversity training efforts failed because they assured free speech protection.”

The sanctions process in court has steadily unveiled earlier examples of Richison’s low regard for the OCPA leadership’s exercise of free speech rights. OCPA’s legal counsel also brought up prior instances where Paycom has targeted members of OCPA’s board, including Larry Parman and former board member Frank Keating. According to OCPA’s legal counsel, these prior attacks demonstrate a vindictiveness on the part of Paycom that warrants significant sanctions.

In an October 2017 email, Larry Parman, an OCPA board member, said he heard from Richison in the midst of OCPA’s efforts to oppose tax-increase proposals at the state Legislature. According to an argument made by OCPA’s attorney, Richison told Parman that OCPA was in conflict with Paycom and said OCPA needed to back off.

Parman, also at the time a Paycom board member, ultimately stepped down from his position with Paycom.

OCPA president Jonathan Small says the clash centers over freedom of speech rights. OCPA’s legal counsel has pressed a belief that the proceedings should include a focus on the Oklahoma Citizens Participation Act, an anti-SLAPP (Strategic Lawsuit Against Public Participation) law.

That law, similar to provisions in many states, affirms that wealthy litigants should not be able to crush the rights of individuals or groups to speak out on contentious public policy questions without fear of economic reprisals.